Chris Whalen and Adi Pekmezovic, former executives from Gamut Capital, recently launched Mill Rock Capital Management to invest in the industrial sector.
The firm this month announced the formation of the firm and its recent investment in Venture Metals and SI Metallics, which simultaneously acquired Versatile Processing Group, of Dallas, Texas. Both companies are scrap-metal services providers of comparable size. The new combined platform is expected to generate more than $700 million in annual revenues.
Mill Rock made the investment through a special purpose vehicle, Whalen, managing partner at Mill Rock, told Buyouts. The firm is planning to raise a fund in the future, but hasn’t launched an official process yet, Whalen said.
Mill Rock, headquartered in New York, targets family-owned and founder-led businesses within six verticals: distribution, chemicals and materials, metals, transportation and logistics, services and specialty manufacturing. The firm is an affiliate of Stellex Capital Management, Mill Rock said in a statement.
Whalen worked at Gamut from 2016 to 2018, prior to which he worked at Harvest Partners from 1999 to 2016, according to his LinkedIn profile. Pekmezovic previously worked as a partner at Gamut, prior to which he was senior investment analyst at Mason Capital Management, his biography said. He also worked at Carlyle Group and Merrill Lynch earlier in his career.
Other executives at Mill Rock include Chuck Heskett, Ed Rose and Wayne Hale, senior partners; Eric Popham, senior principal; and Matthew McDermott, vice president.
The firm invests in companies with $10 million to $50 million in Ebitda with a potential to go higher, Whalen said. Mill Rock’s check sizes will range between $20 million and $75 million, he said.
The firm will make control and minority investments. According to Whalen, Mill Rock will make debt, senior equity or hybrid investments, which provide business owners with benefits of value-added control partnership, without relinquishing a controlling stake. “We think that these are attractive sectors and they all have many family-owned businesses,” Whalen said. “Historically we feel like there has been a difficulty for such business owners to access private equity.”
The firm also put a strong emphasis on operations by hiring all of its 11 investment professionals from the industry.
According to Whalen, the owners are often much more receptive to an approach suggested by someone who comes from a related industry, rather than from a corporate finance background. Mill Rock’s operating partners also have a larger spectrum of responsibilities, Whalen said. “It’s the operating partner’s job to make it work: We all are involved in sourcing, due diligence, execution, and portfolio company management,” he said.
Action Item: Contact Chris Whalen at email@example.com.